Editing Stockhub

{{Logo Image|[[File:Stockhub logo icon meta tag.png|thumb]]}}

{{Short description|Helping to make more money for everyone (and not just the wealthy!).}}

| Risk/return|| [[Risk/return::High]]

| Price per share|| [[Price per share::£10]]

| Asset class|| [[Asset class::Equities]]<ref name=":0">https://find-and-update.company-information.service.gov.uk/company/13169692</ref>

| Industry|| [[Industry::Fintech]]

| Country of incorporation|| [[Country of incorporation::United Kingdom]]<ref name=":0" />

| Minimum investment amount|| [[ Minimum investment amount::£10]]

| Maximum investment amount|| [[ Maximum investment amount::£500,000]]

| Current valuation|| [[Current valuation::£4,000,000]]

| Investor type|| [[Investor type::All]]

| Tax schemes|| [[Tax schemes::SEIS/EIS]]

| Bid/ask spread|| [[Bid/ask spread::NA]]

| Commission amount|| [[Commission amount::Zero]]

| Market|| [[Market::Private]]<ref name=":0" />

*The company’s flagship product is targeted towards Active Investors, who are a group of people that are willing and able to be actively involved in the process of finding suitable investments. The product is an investment research platform. What makes the platform unique is that the research is produced open collaboratively. Evidence suggests that open collaborative investment research will, in time, result in Active Investors making better investment decisions, and, ultimately, more money.

*To date, the Stockhub platform covers 375 investments<ref name=":2" />, and is growing at a rate of seven investments a day<ref>The Stockhub platform was created on 1st March 2022, and the date of the calculation is 25th April 2022, so the platform has been live for 56 days. 375 investments divided by 56 days equates to 7 investments per day.</ref>.

*The Stockhub company estimates that the expected return of an investment in the company over the next five years is 55x<ref>The calculation of the investment return figure can be found in the 'Valuation' section of this report.</ref>. In other words, an £1,000 investment in the company is expected to return £55,000 in five years time.

===What's the company's main offering(s)?===

At the moment (as of 15th April 2022), the main and only offering of the company is Stockhub.

====Who’s the target audience of the company’s flagship product?====

The audience is Active Investors, who are a group of people that are willing and able to be actively involved in the process of finding suitable investments.

====What's the flagship product?====

The product is an investment research platform.<ref name=":2">https://wiki.stockhub.co:447/main/index.php?title=Main_Page</ref>

====What makes the flagship product unique?====

What makes the platform unique is that the research is produced open collaboratively. Evidence suggests that open collaborative investment research will, in time, result in Active Investors making better investment decisions, and, ultimately, more money.

 

[[File:Stockhub report example.png|centre|400px]]

As of 25th April 2022, the Stockhub platform covers 375 investments.<ref>https://wiki.stockhub.co:447/main/index.php?title=Main_Page</ref>

The next key milestone of the company is to increase the number of investments on the platform to 1,000 investments (from 375 investments) by 30th June 2022.

Here, the total addressable market (TAM) is defined as the global advertising market, and based on a number of assumptions<ref group="Note" name="Note01" />, it is estimated that the size of the market as of today (14th March 2022), in terms of revenue, is $850 billion (£635 billion).

A key way to determine a product's closest competitors is by looking at other offerings that are targeting the same or similar target audience (i.e. Active Investors) and aiming to provide the same core benefit (i.e. more money), and then ranking the offerings in terms of the total amount of time spent using and/or money spent purchasing the offerings relative to other similar offerings. With that said, according to Stockhub, the closest competitors of its namesake offering are Yahoo Finance, Investing.com, CoinMarketCap, MarketWatch, Seeking Alpha, Goldman Sachs Investment Research and Edison Investment Research. A detailed comparison between Stockhub and some of its main competitors are shown in the table below.

|+Competition comparison

! !!Stockhub!!Seeking Alpha!!Goldman Sachs Investment Research!!Edison Investment Research

| colspan="5" style="text-align: center;" | How is the research produced?

|Is the information on the platform sourced from a large, relatively open, and often rapidly evolving group of participants (i.e. crowdsourced information)? || style="background: green; color: white;" |Yes || style="background: green; color: white;" |Yes || style="background: red; color: white;" |No || style="background: red; color: white;" |No

|Is the production of the research controlled by no single entity (i.e. decentralised production)? || style="background: green; color: white;" |Yes || style="background: red; color: white;" |No || style="background: red; color: white;" |No || style="background: red; color: white;" |No

| Are contributions able to be made anonymously? || style="background: green; color: white;" |Yes || style="background: red; color: white;" |No || style="background: red; color: white;" |No || style="background: red; color: white;" |No

|What is the estimated cost for the investment research company to produce research on a specific investment per year?|| style="background: green; color: white;" |Zero || style="background: orange; color: white;" |£850 || style="background: red; color: white;" |£5,000 || style="background: red; color: white;" |£5,000

|What is the price of the research?|| style="background: green; color: white;" |Free || style="background: orange; color: white;" |$179.99 per year|| style="background: red; color: white;" |$30,000 per year|| style="background: green; color: white;" |Free

| How many investments are realistically able to be covered using this method? || style="background: green; color: white;" |Unlimited|| style="background: orange; color: white;" |Limited || style="background: orange; color: white;" |Limited || style="background: red; color: white;" |Very limited

|What is the expected quality level of the research?|| style="background: green; color: white;" |High || style="background: orange; color: white;" |Medium || style="background: green; color: white;" |High || style="background: green; color: white;" |High

The company is led by the person who believes in the mission of the company the most: the creator of the company mission. Combined, the members of the team have helped 342 million people - including one of the world's wealthiest persons - make better investment decisions and returns, and helped build some of the world's most renowned digital platforms.

[[File:Jitesh Halai.jpg|200px]]

The Chief Technology Officer of the company is Jitesh Halai. Over a 23 year period, Jitesh has helped build digital platforms at leading institutions (including Just Eat, Asos and Credit Suisse). He studied Mathematical Sciences at Queen Mary University of London and an Executive Master of Business Administration at Imperial College.<ref>https://www.linkedin.com/in/jiteshhalai/</ref>

The compliance advisor of the company is Richard Gill. Over a 13 year period, Richard has helped provide compliance oversight at investment research and trading companies (including Crowd for Angels, Align Research and Master Investor). He is approved by the Financial Conduct Authority to perform functions of compliance oversight (CF10) and money laundering reporting (CF11). He is also a CFA charterholder and a graduate of King's College London.

In keeping in-line with industry standards, the number of years of financial forecasts shown below is five years.

====Income statement====

!Year/Item!! Year 1!! Year 2!! Year 3!! Year 4!!Year 5

| Year end date||28/02/2022||28/02/2023||28/02/2024||28/02/2025||28/02/2026

|Revenues (£'000)||£126.169||£332.681||£842.810||£2,051.447||£4,797.544

|Gross profits (£'000)||£100.935||£266.145||£674.248||£1,641.158||£3,838.035

|Operating profits (£'000)||£25.234||£66.536||£168.562||£410.289||£959.509

| Net profits (£'000)||£20.439||£53.894||£136.535||£332.334||£777.202

=== What are the assumptions used to estimate the financial forecasts?===

|What's the estimated current size of the total addressable market?

|What's the estimated terminal annual growth rate of the total addressable market?

|Research shows that the growth rate of the global advertising market (i.e. the total addressable market) is similar to the growth rate of global gross domestic product<ref>http://www.robertpicard.net/files/econgrowthandadvertising.pdf</ref>, which has averaged (medium) around 3% per year in the last 20 years (2001 to 2022)<ref>https://www.macrotrends.net/countries/WLD/world/gdp-growth-rate</ref>.

|Research shows that there's an almost perfect positive correlation between the amount of adverting revenue generated on a platform and the total amount of time spent by users on the platform. In other words, the more time users spend on a platform, the more advertising revenue the platform generates. Accordingly, Stockhub believes that the best measurement unit of future advertising market share is time. In UK broadcasting, there's a limit on the amount of advertising that can be shown to viewers, and the limit is 15% of 24 hours (i.e. around 9 minutes per hour or around 216 minutes a day). Research suggests that Active Investors represent around 10.4% of the global population and that the average amount of time Active Investors spend researching investments is 30 minutes per day. Consequently, the Stockhub company estimates that the peak market share of its namesake platform is around 2%, and, therefore, suggests using the share amount here.

|Research suggests that the revenue pattern of companies is similar to the pattern produced by the Gaussian distribution function  (i.e. the revenue distribution is bell shaped)<ref>http://escml.umd.edu/Papers/ObsCPMT.pdf</ref>, so Stockhub suggests using that function here.

| What is the estimated Stockhub lifespan?

|What's the estimated standard deviation of Stockhub revenue?  

|5 years

|Another way of asking this question is this way: within how many years either side of the mean does 68% of revenue occur? The Stockhub company suggests using 5 years (i.e. 68% of all sales happen within 5 years either side of the mean year), so that's what's used here.

| colspan="3" |'''<div style="text-align: center;">Growth stages</div>'''

|How many main stages of growth is Stockhub expected to go through?  

|Research suggests that a company typically goes through four distinct stages of cash flow growth.<ref>Levie J, Lichtenstein BB (2010) A terminal assessment of stages theory: Introducing a dynamic approach to entrepreneurship. Entrepreneurship: Theory & Practice 34(2): 317–350. <nowiki>https://doi.org/10.1111/j.1540-6520.2010.00377.x</nowiki></ref> Research also shows that incorporating those stages into the discounted cash flow model improves the quality of the model and, ultimately, the quality of the value estimation.<ref>Stef Hinfelaar et al.:, 2019.</ref>

In addition, research shows that a key way to determine the stage which a company is in is by examining the cash flow patterns of the company.<ref>Dickinson, 2010.</ref> A summary of the economic links to cash flow patterns can be found in the appendix of this report. Stockhub estimates that with its operating and investing cash flows both negative (-) and its financing cash flows positive (+), the company is in the first stage of growth (i.e. the introduction stage), and, therefore, it has a total of four main stages of growth.

|What's the expected duration of growth stage 1?

|Research suggests that given the expected lifespan of the company (i.e. 50 years), 17 years is suitable for stage 1.<ref name=":6">http://escml.umd.edu/Papers/ObsCPMT.pdf</ref>

|What's the expected duration of growth stage 2?

|Research suggests that given the expected lifespan of the company (i.e. 50 years), 4 years is suitable for stage 2.<ref name=":6" />

|What's the expected duration of growth stage 3?

|Research suggests that given the expected lifespan of the company (i.e. 50 years), 8 years is suitable for stage 3.<ref name=":6" />

|What's the expected duration of growth stage 4?

|21 years

|Research suggests that given the expected lifespan of the company (i.e. 50 years), 21 years is suitable for stage 4.<ref name=":6" />

| colspan="3" |'''<div style="text-align: center;">Growth stage 1</div>'''

| Cost of goods sold margin (%)

|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 1)<ref name=":7">http://people.stern.nyu.edu/adamodar/pdfiles/papers/younggrowth.pdf</ref>, and the margin for its peers is 20%.

|Selling, General and Administrative expenses margin (%)

|80%

|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 1)<ref name=":7" />, and the margin for its peers is 80%.

|19%

|Depreciation rate (%)

|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 1)<ref name=":7" />, and the margin for its peers is 10%.

|Fixed capital margin (%)

|25%

|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 1)<ref name=":7" />, and the margin for its peers is 25%.

| colspan="3" |'''<div style="text-align: center;">Growth stage 2</div>'''

| Cost of goods sold margin (%)

|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)<ref name=":7" />, and the margin for its peers is 20%.

|Selling, General and Administrative expenses margin (%)

|60%

|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)<ref name=":7" />, and the margin for its peers is 60%.

|Depreciation rate (%)

|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)<ref name=":7" />, and the margin for its peers is 10%.

|Fixed capital margin (%)

|25%

|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)<ref name=":7" />, and the margin for its peers is 25%.

| colspan="3" |'''<div style="text-align: center;">Growth stage 3</div>'''

| Cost of goods sold margin (%)

|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3)<ref name=":7" />, and the margin for its peers is 20%.

|Selling, General and Administrative expenses margin (%)

|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3)<ref name=":7" />, and the margin for its peers is 40%.

|Depreciation rate (%)

|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3)<ref name=":7" />, and the margin for its peers is 10%.

|Fixed capital margin (%)

|25%

|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3)<ref name=":7" />, and the margin for its peers is 25%.

|Change in working capital (£000)

| colspan="3" |'''<div style="text-align: center;">Growth stage 4</div>'''

|Cost of goods sold margin (%)

|20%

|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the margin for its peers is 20%.

|Selling, General and Administrative expenses margin (%)

|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the margin for its peers is 40%.

|Tax rate (%)

|Depreciation rate (%)

|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the margin for its peers is 10%.

|Fixed capital margin (%)

|25%

|Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the margin for its peers was 25%.

|Zero

|10%

Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3).

 

 

A peer that is in growth stage three (i.e. the same growth stage) is Meta Platform Inc. and its discount rate is around 10% (for further information on the discount rate, see the table in the Appendix below).

 

|Research suggests that a suitable rate for a company in this growth stage (i.e. stage 4) is 100%.

 

|Which time period do you want to use to estimate the expected return?

|Research suggests that following a market crash, the average amount of time it takes for the price of a stock market to return to its pre-crash level (i.e. the recovery period) is at least three years.<ref>https://www.newyorkfed.org/mediabrary/media/medialibrary/media/research/staff_reports/research_papers/9809.pdf</ref> Accordingly, Stockhub suggests that to account for general market cyclicity, it's best to estimate the expected return of the company between now and five years time.

The main inputs that result in the greatest change in the expected return of the Stockhub investment are, in order of importance (from highest to lowest):  

#The discount rate (the default time-weighted average rate is 15%);

#The probability of success rate (the default time-weighted average rate is 71%); and

! Main input

|10x

|55x

|412x

|14x

|55x

|88x

|27x

|55x

| 82x

 

====What's the expected return of an investment in Stockhub?====

The company estimates that the expected return of an investment in Stockhub over the next five years is 57x. In other words, an £1,000 investment in the company is expected to return £57,000 in five years time.

Assuming that a suitable return level over five years is 10% per year and Stockhub achieves its expected return level (of 57x), then an investment in the Stockhub company is considered to be a 'suitable' one.

{| class="wikitable"

|+Key inputs

!Description

|Which type of multiple do you want to use?

|Growth-adjusted EV/sales

|For the numerator, Stockhub believes that to account for the different financial leverage levels of its peers, it's best to use enterprise value (EV), rather than price. For the denominator, Stockhub believes that because it expects to reinvest almost all of its revenue back into the business  over the five year forecast period and therefore its earnings are expected to be abnormally low over the period, it's best to use sales. Accordingly, Stockhub suggests valuing its company using the EV/sales ratio. However, Stockhub feels that to take into account the different business lifecycle stages of its peers, the most suitable valuation multiple to use is the growth-adjusted EV/sales multiple<ref group="Note" name="Note15" />, rather than the EV/sales multiple.

|In regards to the growth-adjusted EV/sales multiple, for the sales figure, which year to you want to use?

| Year 5

|Stockhub suggests that with sales forecast to grow exponential over the five year forecast period, it's best to use forward-looking data, rather than historic data.

In regards to the growth-adjusted EV/sales multiple, for the sales figure, Stockhub suggests that in order to account for the forecasted exponential growth of the business, it's best to use one at the end of the forecast period (i.e. Year 5).

|In regards to the growth-adjusted EV/sales multiple, for the sales growth figure, which year(s) do you want to use?

| Year 6 to 8, from now

|Stockhub suggests that for the sales growth figure, it's best to use Year 6 to 8.

|In regards to the growth-adjusted EV/sales multiple, what multiple figure do you want to use?

|42x

|Stockhub's vision is for the Stockhub platform to be one of the most successful advertising platforms, and for that reason, it sees its closest peers as the owners of the leading advertising platforms. Those platforms are Facebook, Google Search, Youtube, Twitter, WhatsApp, Instagram and SnapChat. Note: Facebook, Instagram and WhatsApp are all owned by Meta Platforms, Inc, and Google Search and Youtube are all owned by Alphabet, Inc. The average multiple for those companies is 42x.

|Which financial forecasts to use?

|Stockhub

|The only available forecasts are the ones that are supplied by the Stockhub company (the forecasts can be found in the financials section of this report), so Stockhub suggests using those.

|What's the current value of the Stockhub company?

|£4,000,000

|As at 23rd February 2022, the Stockhub company estimates the current value of its company at £4 million.

|Which time period do you want to use to estimate the expected return?

|Between now and five years time

|Stockhub suggests that to account for general market cyclicity, it's best to estimate the expected return of the company between now and five years time.

The main inputs that result in the greatest change in the expected return of the Stockhub investment are, in order of importance (from highest to lowest):  

#Stockhub peak market share (the default value is 2%).

! Main input

!50% worse

!50% better

|28x

|57x

|86x

 

 

|Meta Platform Inc.||Internet content & communication||8.04x||19.20%|| style="background: blue; color: white;" |42x

|-

|Robinhood Inc.||Software - Infrastructure||17.69x||23.30%|| style="background: blue; color: white;" |75x

=== Meta Platform Inc. ===

|+Cost of equity

|Risk-free rate (%)

|3.44%

|Here, the risk free rate is the US 30 year treasury bond, and is calculated as at 15th September 2022.

|Equity risk premium (%)

|5.26%

|Here, the equity risk premium is relation to the global region, and is calculated as at 1st January 2022 (https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/ctryprem.html).

|Cost of equity (%)

|10.44%

|Cost of equity = Risk-free rate + Beta x Equity risk premium

===Economic links to cash flow patterns ===

|+Economic links to cash flow patterns

|Operating|| style="background: red; color: white;" |-|| style="background: green; color: white;" |+

| style="background: orange; color: white;" | +/-|| style="background: green; color: white;" |+|| style="background: red; color: white;" |-

|Investing|| style="background: red; color: white;" |-|| style="background: red; color: white;" |-|| style="background: orange; color: white;" |+/-|| style="background: red; color: white;" |-

|Financing|| style="background: green; color: white;" |+|| style="background: green; color: white;" |+|| style="background: orange; color: white;" |+/-|| style="background: red; color: white;" |-|| style="background: orange; color: white;" |+/-

'''Note 5: Calculation of the growth-adjusted EV/sales ratio'''